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Billionaire doctor and entrepreneur Patrick Soon-Shiong would take control of the TGen building at the heart of the Phoenix Biomedical Campus in downtown Phoenix under a long-term lease-to-purchase detail that the city of Phoenix staff is now draftin

Billionaire doctor and entrepreneur Patrick Soon-Shiong would take control of the TGen building at the heart of the Phoenix Biomedical Campus in downtown Phoenix under a long-term lease-to-purchase deal Phoenix is drafting(Photo: Kevork Djansezian/Getty Images)

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City of Phoenix selects billionaire doctor's proposal to buy the TGen building downtown.

Patrick Soon-Shiong's NantWorks LLC is the only entity that responded to Phoenix's call for proposals.

Billionaire doctor and entrepreneur Patrick Soon-Shiong is pursuing a deal with the city of Phoenix to buy the TGen building at the heart of the Phoenix Biomedical Campus in downtown Phoenix under a long-term lease-purchase agreement.

The city of Phoenix developed the 156,215-square-foot building at 445 N. Fifth Street a decade ago as the headquarters for the Translational Genomics Research Institute, or TGen, and the International Genomics Consortium, or IGC

At the time, the city had high hopes that the TGen and its genomic technology would serve as a catalyst for high-paying jobs and research discoveries across a 28-acre campus that would be co-anchored by the UA College of Medicine-Phoenix.

The city of Phoenix issued a request for proposals on Nov. 23, and Soon-Shiong's NantWorks LLC was the only entity that responded by the city's mid-January deadline, according to documents provided by the city's community and economic development department.

After the call for proposals ended Jan. 15, the city of Phoenix chose NantWorks LLC as the "recommended proposer" to purchase the and laboratory building with ample laboratory and office space.

That does not mean it's a done deal, city officials said. Phoenix development staffers said that terms of the deal are still being drawn, and the sale details must be approved by Phoenix City Council, possibly this spring, before a contract is signed to complete the purchase.

Paul Blue, deputy city manager who oversees community and economic development, said the city solicited proposals for the prime downtown real estate to shed debt from an asset that could be purchased by a private buyer.

Earlier this month, Phoenix City Council accepted a $300 million offer to sell the city-owned Sheraton Grand Phoenix hotel to a private owner. Council members said selling the money-losing hotel was meant to stop the mounting financial losses.

"It's an opportunity to dispose of an asset in a productive way that helps the city's bioscience campus," Blue said.

The city-owned TGen building collects about $3.5 million in annual lease payments from TGen, IGC and other tenants in the research building. Total operating costs for the building in 2014 reached nearly $2.5 million, according to the city's request for proposal document.

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The city still must repay $71.6 million in principal and interest payments through 2035, according to a a bond-payment schedule that is included in the city's request for proposal.

A researcher does lab work at Translational Genomics Research Institute (TGen) in Phoenix.(Photo: David Kadlubowski/The Republic)

The city's proposal offered three scenarios for a potential buyer -- purchase the building for a minimum cash price of $62.9 million or sign a lease-purchase agreement with terms of either 10- or 20-years.

City officials did not provide a copy of NantWorks LLC's proposal to purchase the TGen building, but a NantWorks representative said that Soon-Shiong's company would pursue the 20-year master lease-purchase of the building. That option requires the buyer to bid a minimum of $3.59 million per year over the 20-year term.

Soon-Shiong, ranked by Forbes magazine as the world's wealthiest doctor with a net worth of more than $12 billion, already has plans to develop a technology-based health research hub on seven acres north of Filmore between Fourth and Sixth streets on the Phoenix Biomedical Campus.

In May 2015, the Phoenix City Council approved ASU and Soon-Shiong's NantWorks' plan that calls for a $75 million and 200,000 square feet of space during an initial development phase.

Former Mayor Phil Gordon, who joined one of Soon-Shiong's ventures after he left office, said Soon-Shiong is pursuing the purchase of the TGen building because he'll need more space for employees and researchers before his downtown development will be ready.

In recent years, Soon-Shiong has embarked on a spree of acquisitions and ventures of data and medical companies with a larger goal of combining big data and cutting-edge medical treatments. Last week,he announced a new effort with Phoenix Children's Hospital and nine other pediatric hospitals and institutes to rapidly test cancer treatments that prod the immune system to fight tumors.

"He is going to need a lot more (space) before the building opens," said Gordon. "He can move some researchers and other people into," the TGen building.

The city's proposal would require the building owner to honor all existing leases in the building. If NantWorks completes the purchase of the Fifth Street building just north of East Van Buren Street, Soon-Shiong's company would act as the landlord for TGen, IGC and other tenants.

TGen, which uses genomic sequencing technology to identify genetic abnormalities that may contribute to disease, controls about 60 percent of the building's space through a lease that has nearly 23 years remaining, according to Chief Operating Officer Tess Burleson,

"TGen is a very collaborative non-profit organization focused on solving complex problems toward improvements in health," Burleson said. "We are eager to collaborate wherever our capabilities can make that a reality."

The TGen building sale will come with a land parcel of more than 59,000 square feet, which will be carved out from a larger parcel to allow for future development. The TGen-building buyer also will be required to honor parking agreements for existing tenants.

The city of Phoenix build the TGen building over an 18-month period between 2004 and 2006. A year later,the UA College of Medicine opened its downtown Phoenix branch.

Thought there have been relatively few private-sector companies to emerge from the Phoenix Biomedical Campus, other publicly-funded buildings such as the Arizona Biomedical Collaborative and the Health Sciences Education building have sprouted on campus. UA, ASU and Northern Arizona University all have health-related programs on the campus, and last year, the UA's Arizona Cancer Center opened through a partnership with Dignity Health and St. Joseph's Hospital and Medical Center.